Wayfair Inc. (NYSE: W) (the “Company,” “we” or “Wayfair”)
announced today the pricing of $1.32 billion aggregate principal
amount of 0.625% convertible senior notes due 2025 (the “notes”) in
a private offering (the “offering”) to qualified institutional
buyers pursuant to Rule 144A under the Securities Act of 1933, as
amended (the “Securities Act”). The offering was upsized from the
previously announced offering of $1.2 billion aggregate principal
amount of notes. In connection with the offering, the Company
granted the initial purchasers an option to purchase, within a
13-day period beginning on, and including, the initial issuance
date of the notes, up to an additional $198 million aggregate
principal amount of notes.
The notes will bear interest at a rate of 0.625% per year,
payable semi-annually in arrears on April 1 and October 1 of each
year, beginning April 1, 2021. The notes will mature on October 1,
2025, unless earlier redeemed, repurchased or converted in
accordance with their terms. Prior to July 1, 2025, the notes will
be convertible only upon satisfaction of certain conditions and
during certain periods. Thereafter, the notes will be convertible
at any time until the close of business on the second scheduled
trading day immediately preceding the maturity date. The Company
may not redeem the notes prior to October 4, 2022. On or after
October 4, 2022, the Company may redeem for cash all or part of the
notes if the last reported sale price of the Company’s Class A
common stock has been at least 130% of the conversion price then in
effect for at least 20 trading days (whether or not consecutive),
including at least one of the five trading days immediately
preceding the date on which the Company provides notice of
redemption, during any 30 consecutive trading day period ending on,
and including, the trading day immediately preceding the date on
which the Company provides notice of redemption. The redemption
price will equal 100% of the principal amount of the notes being
redeemed, plus accrued and unpaid interest to, but excluding, the
redemption date.
The notes will be convertible at the option of holders, subject
to certain conditions and during certain periods, into cash, shares
of the Company’s Class A common stock or a combination of cash and
shares of the Company’s Class A common stock, with the form of
consideration determined at the Company’s election. Holders of the
notes will have the right to require the Company to repurchase all
or a portion of their notes at 100% of their principal amount, plus
any accrued and unpaid interest, upon the occurrence of certain
events. The conversion rate will initially be 2.3972 shares of the
Company’s Class A common stock per $1,000 principal amount of notes
(equivalent to an initial conversion price of approximately $417.15
per share of the Company’s Class A common stock). The initial
conversion price of the notes represents a premium of approximately
32.5% over the U.S. composite volume weighted average price of the
Company’s Class A common stock on Tuesday, August 11, 2020,
including the opening and closing trades on such day, which was
$314.8312 per share. The sale of the notes is expected to close on
August 14, 2020, subject to customary closing conditions.
When issued, the notes will be the Company’s senior unsecured
obligations and will rank senior in right of payment to any of the
Company’s unsecured indebtedness that is expressly subordinated in
right of payment to the notes; equal in right of payment to any of
the Company’s existing and future unsecured indebtedness that is
not so subordinated, such as its 0.375% convertible senior notes
due 2022 (the “2022 Notes”), 1.125% convertible senior notes due
2024, 2.50% accreting convertible senior notes due 2025 (the
“Existing 2025 Notes”) and 1.00% convertible senior notes due 2026;
effectively junior in right of payment to any of the Company’s
secured indebtedness to the extent of the value of the assets
securing such indebtedness; and structurally junior to all existing
and future indebtedness and other liabilities (including trade
payables) of the Company’s subsidiaries, including Wayfair LLC’s
guarantee of the Existing 2025 Notes.
In connection with the pricing of the notes, the Company entered
into privately negotiated capped call transactions with certain of
the initial purchasers or their affiliates and certain other
financial institutions (the “option counterparties”). These capped
call transactions are generally expected to reduce the potential
dilution with respect to the Company’s Class A common stock upon
any conversion of notes and/or offset any cash payments the Company
is required to make in excess of the principal amount of converted
notes, as the case may be, in the event that the market price of
the Company’s Class A common stock is greater than the strike price
of the capped call transactions, with such reduction of potential
dilution and/or offset of cash payments subject to a cap. The cap
price of the capped call transactions will initially be $787.0780
per share, which represents a premium of 150% over the U.S.
composite volume weighted average price of the Company’s Class A
common stock on Tuesday, August 11, 2020, including the opening and
closing trades on such day, and is subject to certain adjustments
under the terms of the capped call transactions.
The Company has been advised that, in connection with
establishing their initial hedges of the capped call transactions,
the option counterparties or their respective affiliates expect to
purchase shares of the Company’s Class A common stock and/or enter
into various derivative transactions with respect to the Company’s
Class A common stock concurrently with, or shortly after, the
pricing of the notes. This activity could increase (or reduce the
size of any decrease in) the market price of the Company’s Class A
common stock or the notes at that time. In addition, the Company
expects that the option counterparties or their respective
affiliates may modify their hedge positions by entering into or
unwinding various derivatives with respect to the Company’s Class A
common stock and/or purchasing or selling the Company’s Class A
common stock or other securities of the Company in secondary market
transactions from time to time prior to the maturity of the notes
(and are likely to do so on each trading day during the observation
period relating to any conversion of the notes on or after July 1,
2025 that is not in connection with a redemption, or following our
election to terminate any portion of the capped call transactions
in connection with any repurchase, redemption, exchange or early
conversion of the notes). This activity could also cause or avoid
an increase or a decrease in the market price of the Company’s
Class A common stock or the notes, which could affect the ability
of holders to convert the notes and, to the extent the activity
occurs during any observation period related to a conversion of the
notes, it could affect the number of shares of the Company’s Class
A common stock and value of the consideration that holders will
receive upon conversion of the notes.
In addition, if any such capped call transaction fails to become
effective, whether or not this offering of notes is completed, the
option counterparty party thereto may unwind its hedge positions
with respect to the Company’s Class A common stock, which could
adversely affect the value of the Company’s Class A common stock
and, if the notes have been issued, the value of the notes.
The Company estimates that the net proceeds from the offering of
notes will be approximately $1,304.6 million (or approximately
$1,500.3 million if the initial purchasers exercise their option to
purchase additional notes in full), after deducting fees and
estimated offering expenses payable by the Company. The Company
intends to use approximately $221.8 million of the net proceeds
from the offering of notes to pay the cost of the capped call
transactions. If the initial purchasers exercise their option to
purchase additional notes, the Company expects to use a portion of
the net proceeds from the sale of the additional notes to enter
into additional capped call transactions. In addition, the Company
also intends to use approximately $1,040.9 million of the net
proceeds from the offering to repurchase for cash approximately
$343.4 million in aggregate principal amount of the 2022 Notes as
described below. The Company intends to use the remaining net
proceeds, if any, from the offering for working capital and general
corporate purposes, including, but not limited to, operating and
capital expenditures. The Company may also use a portion of such
net proceeds to finance acquisitions, strategic transactions,
investments, repurchases of the Company’s Class A common stock or
the repayment, redemption, purchase or exchange of indebtedness
(including its existing convertible notes). While the Company has
no specific plans currently, it may also use such net proceeds to
mitigate the equity dilution associated with convertible debt
through cash purchases to offset a portion of the shares of Class A
common stock underlying its existing convertible notes, in
open-market purchases, privately negotiated transactions or
otherwise upon such terms, at such prices and in such amounts as it
may determine based on market conditions, its liquidity
requirements, contractual restrictions and other factors, any of
which may change, and the amounts involved may be material.
Contemporaneously with the pricing of the notes in the offering,
the Company entered into separate and individually negotiated
transactions (the “concurrent note repurchases”) with certain
holders of the 2022 Notes to repurchase approximately $343.4
million in aggregate principal amount of the 2022 Notes for an
aggregate of approximately $1,040.9 million in cash.
The Company expects that certain holders of the 2022 Notes that
the Company agreed to repurchase that have hedged their equity
price risk with respect to such 2022 Notes (the “hedged holders”)
will, concurrently with or shortly after the pricing of the notes,
unwind all or part of their hedge positions by buying the Company’s
Class A common stock and/or entering into or unwinding various
derivative transactions with respect to the Company’s Class A
common stock. The amount of the Company’s Class A common stock to
be purchased by the hedged holders may be substantial in relation
to the historic average daily trading volume of the Company’s Class
A common stock. The repurchase of the 2022 Notes and the potential
related market activities by holders of the 2022 Notes
participating in the concurrent note repurchases could increase (or
reduce the size of any decrease in) the market price of the
Company’s Class A common stock and may have increased the effective
conversion price of the notes. The Company cannot predict the
magnitude of such market activity or the overall effect it will
have on the price of the notes or the Company’s Class A common
stock.
The notes and the Class A common stock issuable upon conversion
of the notes, if any, are not being registered under the Securities
Act, or the securities laws of any other jurisdiction. The notes
and the Class A common stock issuable upon conversion of the notes,
if any, may not be offered or sold in the United States except in
transactions exempt from, or not subject to, the registration
requirements of the Securities Act and any applicable state
securities laws.
This press release does not constitute an offer to sell or a
solicitation of an offer to buy the securities described herein,
nor shall there be any sale of these securities in any state or
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of such jurisdiction.
About Wayfair
Wayfair believes everyone should live in a home they love.
Through technology and innovation, Wayfair makes it possible for
shoppers to quickly and easily find exactly what they want from a
selection of more than 18 million items across home furnishings,
décor, home improvement, housewares and more. Committed to
delighting its customers every step of the way, Wayfair is
reinventing the way people shop for their homes - from product
discovery to final delivery.
The Wayfair family of sites includes:
- Wayfair – All things home, all in one place.
- Joss & Main - Stylish designs to discover daily.
- AllModern - The best of modern, priced for real life.
- Birch Lane - Classic home. Comfortable cost.
- Perigold - The widest-ever selection of luxury home
furnishings.
Wayfair generated $11.5 billion in net revenue for the twelve
months ended June 30, 2020. Headquartered in Boston, Massachusetts
with operations throughout North America and Europe, the Company
employs more than 16,200 people.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of federal and state securities laws. All statements
other than statements of historical fact contained in this press
release, including, but not limited to, statements regarding:
whether we will issue the notes; the anticipated use of the net
proceeds of the offering; expectations regarding the effect of the
capped call transactions and the repurchase of the 2022 Notes and
regarding actions of the option counterparties and their respective
affiliates; whether the capped call transactions will become
effective; whether the repurchases of the 2022 Notes will close,
are forward-looking statements. In some cases, you can identify
forward-looking statements by terms such as "may," "will,"
"should," "expects," "plans," "anticipates," "could," "intends,"
"target," "projects," "contemplates," "believes," "estimates,"
"predicts," "potential" or "continue" or the negative of these
terms or other similar expressions.
Forward-looking statements are based on current expectations of
future events. We cannot guarantee that any forward-looking
statement will be accurate, although we believe that we have been
reasonable in our expectations and assumptions. Investors should
realize that if underlying assumptions prove inaccurate or that
known or unknown risks or uncertainties materialize, actual results
could vary materially from our expectations and projections.
Investors are therefore cautioned not to place undue reliance on
any forward-looking statements. These forward-looking statements
speak only as of the date of this press release and, except as
required by applicable law, we undertake no obligation to publicly
update or revise any forward-looking statements contained herein,
whether as a result of any new information, future events or
otherwise.
A list and description of risks, uncertainties and other factors
that could cause or contribute to differences in our results can be
found in our filings with the Securities and Exchange Commission,
including our most recent Annual Report on Form 10-K and subsequent
filings. We qualify all of our forward-looking statements by these
cautionary statements.
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version on businesswire.com: https://www.businesswire.com/news/home/20200812005348/en/
Investor Relations: Wayfair Inc. Jane Gelfand
IR@wayfair.com
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